With so much uncertainty in the world of supply chain, logistics planning might be tough — but it doesn’t have to be.
Some difficulties are quite ordinary and may be handled in much the same manner every year or season with appropriate preparation. Other problems, on the other hand, are completely unanticipated, and there is little you can do to prevent them from having an impact on your company right now.
However, even if you plan carefully and have a solid logistics operations in place, you should be able to fulfill customer needs in the event of an unforeseen calamity.
Here are some of the issues you should expect, as well as some you can’t anticipate, along with some helpful hints for both.
Planned challenges
When there are logistics challenges and how to plan for them
Holidays
- Keep in mind that national and international holidays can have an impact on your operations across other countries. For example, Chinese New Year will have a negative influence on manufacturing lead times from China, while Boxing Day will result in fewer warehouse employees in the United Kingdom the day after Christmas.
- If you’re planning to outsource your holiday fulfillment, contact a 3PL as soon as possible. This will give you enough time to get started, establish service standards, and troubleshoot problems before peak season starts.
- Take your most recent sales figures into account when predicting seasonal demand, consider any marketing you’ll be conducting, and determine how quickly each SKU moves. These elements of information will assist you in ordering enough inventory to meet consumer demand and maintain timely restocking throughout the busy season.
- Take into account any longer lead times from manufacturers, suppliers, vendors, transporters, and other outside parties during the holidays. Taking a vacation may be difficult for all of us at this time of year, so allow for delays to compensate.
- Consider the unpacking experience and budget for any holiday customizations (gift notes, inserts, seasonal packaging, etc) in terms of both money and time involved in completing each transaction.
- Create a clear returns strategy and make it readily accessible on your website. It’s also critical to provide consumers with clear instructions for returning their purchase.
- Make sure quality control is more stringent. Holidays are a popular time for employees to be preoccupied or take vacation, which is why you’ll see an influx of new and inexperienced workers who are more likely to make mistakes. If you increase quality control efforts, you’ll have a better chance of maintaining a high order accuracy rate.
Business growth
- Create a simple, unified technological platform. Information is lost and time wasted if there are too many platforms. If you’re thinking about hiring a 3PL, look for one that has intuitive, multi-functional technology that seamlessly links with other technologies and software programs.
- To decide whether it is preferable to invest in your own infrastructure or to outsource, consider the following questions: Is your company experiencing very steady, very quick development? Unless your firm is seeing extremely rapid development, partnering with a 3PL for infrastructure and equipment is usually more cost-effective.
- Consider branching out into several platforms and the costs involved with each. Start by researching the requirements, procedure, turnaround time, and costs for selling on Walmart.com; if you want to open a brick-and-mortar location, be ready to pay rent, labor, insurance, and utility bills.
- Invest in an inventory management system that will keep track of inventory levels in real time, store data on sales, connect directly to your ecommerce site, and notify you when SKUs approach their reorder points.
- Remember that self-fulfillment is not permanent once you begin to expand, so look for 3PL partners who you can outsource logistics to when you require it.
- Consider what services you’ll need in-house and which you may outsource to a 3PL, as well as when it will be profitable to move.
Shipping costs and expectations
- Inventory should be distributed across the country — ideally, at locations close to larger metropolises — given that shipping cost savings outweigh higher holding expenses.
- You can get discounted shipping costs with certain carriers if you work with the appropriate 3PL.
- Know how to calculate both, as well as dimensional weight and shipping zones. The two are combined to determine your shipping costs, so maximizing each will assist you save money.
- Expect higher rates year after year, and be ready for yearly hikes. Carriers’ rates typically rise over time, and new charges go into effect in December or January.
Logistics Unplanned challenges
There will be logistics challenges that are unplanned and how to be prepared
COVID-19
- In periods of sickness, plan for higher labor costs as demand for labor rises while the supply of labor decreases (and if you think about rewarding hero pay for important employees).
- Have a simple WMS so that operations may keep up with demand increases, even while operating with fewer people.
- Establish a process for distributing items to improve the likelihood that your clients receive delivery close to the date they anticipated, even if your supply chains are delayed.
Government regulations
- If a trade war or other international issues arise, keep an eye out for alternate sources and manufacturers.
- Work with a 3PL that understands tough government rules.
- At the country level, pay attention to product bans and shipping limitations (e.g., e-cigarettes, CBD oils, etc.).
Gas price fluctuations
- Use Lean Manufacturing to keep your costs down and maintain stock availability by getting rid of wasteful processes. Use Value Stream Mapping to end the waste of time and materials that occurs when inventory is carried from one location to another.
- Consider other modes of transportation, such as boat or plane.
Unanticipated delays
- Keep safety stock on hand at all times. Unanticipated blockages (such as the Suez Canal Blockage) can prevent you from receiving inventory on time, so keep backup units on hand.
- Invest in an IMS or conduct inventory audits to determine how much of each SKU you have at any given moment.
- You should always factor in plenty of lead time between ordering more goods and receiving them. Port congestion cannot always be predicted, therefore
Container shortages
- Partner with a freight carrier or 3PL that has dedicated container storage to cut down on queue times.
- You should budget for additional expenditures associated with renting a container.
- Prepare for longer container wait times and include them into lead time calculations.